The Honorable Adrian Smith
U.S. Congressman, Third District of Nebraska
Chairman, House Ways and Means Human Resources Subcommittee
1102 Longworth House Office Building
Washington, DC 20515
Dear Chairman Smith,
I write to you on behalf of the Policy and Taxation Group, which is an organization comprised of family-held businesses from throughout the country that are dedicated to reform of the estate tax. We recently submitted a letter for the record as part a Tax Policy Subcommittee hearing, which examined “tax extenders” and the policy justifications underlying these temporary provisions. In that letter, we urged the Subcommittee not to forget another important set of provisions that are also temporary: all of the individual tax policies included in tax reform – especially the doubling of the estate tax exemption. We now ask the same of you.
We are appreciative that tax reform included a doubling of the estate tax exemption, however, we believe that this should be a permanent change – not one which expires at the end of 2025. While we believe that eliminating the estate tax is ultimately the best approach, permanently doubling the exemption is a step in the right direction. That said, to maximize the benefits that come with reforming the estate tax, we believe that more than just a doubling of the exemption is needed.
For example, based on the 2016 Internal Revenue Service estate tax tables, 88-percent of those who filed an estate tax return fall within the current exemption; however, of those who actually paid the tax, 66-percent remain subject to the tax – despite the increased exemption. This means that many of the family-held businesses that employ millions of Americans will be at risk when their estate tax bills come due – as will the jobs that they provide. Attached to this letter is a PowerPoint (along with a one-page summary) with jobs and other economic data on 180 of the largest family-owned businesses in the United States to underscore the important role that these businesses play as job creators throughout the country.
If the Subcommittee really wants to address the “jobs gap,” you must take bold action to protect family-held businesses, spur additional job creation, and help the economy continue to grow. One legislative option that will help all family-held businesses subject to the estate tax: reduce the rate – which is arbitrarily the highest rate in the tax Code – to the capital gains tax rate, while maintaining step-up in basis.
In addition to a reduction in the estate tax rate, there are various other policy changes that could be implemented to protect family-held businesses from the unfair and disastrous consequences of the estate tax. As the Subcommittee continues to examine such policies in a post-tax reform world, we stand ready to serve as a resource to you, your fellow Subcommittee members, and staff and are happy to provide additional information or answer any questions that you may have.
Thank you for your consideration of these important tax policies and your continued efforts to improve our nation’s tax Code.
Founder, Policy and Taxation Group
Download “Jobs and Opportunity: Legislative Options to Address the Jobs Gap” including graphics and statistics.